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Europe: The Patient Is On the Table

Europe: The patient is on the table. Martin Wolff, in an editorial in the Financial Times this morning, said that euro zone officials who insisted on treaty changes that would take two years to enact before they would act decisively were akin to doctors who were treating a critically ill patient by working out an exercise program to ensure he didn't have another heart attack.

It's an apt analogy. We got a reminder of how ill the patient is today with new data indicating Europe is sliding into a recession . The Markit Eurozone Manufacturing Purchasing Managers' Index (PMI) fell to 46.4 in November, its lowest level since July 2009, down from October's 47.1.

Also: China's official PMI shrank in November, to 49 — indicating contraction in the economy for the first time in nearly three years.

European Central Bank head Mario Draghi gets the patient is becoming critical: outlines of a deal are now clear. Draghi told the European Parliament this morning that, "A new fiscal compact would be the most important signal from euro area governments for embarking on a path of comprehensive deepening of economic integration. It would also present a clear trajectory for the future evolution of the euro area, thus framing expectations."

In other words, get your political house in order, and help can be forthcoming from monetary authorities.

Draghi will likely cut interest rates next week, but he's clearly signaling that he may be even more accommodative. Many are talking about the ECB coming in to lend to the International Monetary Fund , who will then impose austerity budgets on Italy and Spain.

French President Nicolas Sarkozy will be speaking today in Toulon, France, on his vision for euro zone integration; German Chancellor Angela Merkel speaks tomorrow to the Bundestat, Germany on the same subject.

Merkel wants the power to have the European Union veto national budgets as a way of maintaining fiscal restraint — before they go to their national parliaments. Repeat offenders could even be sent to the European Court of Justice.

Expect a catfight over this. Sarkozy is already facing electoral challenges from his Socialist counterparts, who are claiming they would not give up national sovereignty to Brussels.

Elsewhere:

1. November retail sales: up, but heavy discounting will impact margins. Aeropostale said the retail environment remained "incredibly promotional."

Actually, maybe it didn't matter that we did open at midnight: Kohl's, down 6.2 percent, way below expectations of up 2 percent, were a real puzzler.

Macy's (M) had a strong performance, up 4.8 percent.

JC Penney, down 2 percent, roughly in line with expectations. The decision to open at 4 AM on Friday, rather than midnight, "adversely impacted Black Friday sales. Sales remained soft in-store throughout the holiday weekend."

Ross Stores raised guidance.

2) Limited Brands shares rise more than 3 percent in pre-market trading after the women’s apparel retailer declared a $2 per share special dividend, which will be paid on Dec. 23, 2011. The company reported a November comparable store sales increase of 7 percent, beating analysts’ 4.4 percent estimate.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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